February, 2017

Research in 2014 found that Britain had the highest rate of fuel tax in Europe. Drivers pay around 73p in tax for every litre of fuel that they put in their tank, resulting in a substantial tax bill every year.

In the latest part of our “52 Ways to Save Tax” guide, we look at how you reduce the amount of fuel tax you can pay by driving more efficiently.

52 Ways to Save Tax – Part 29: Drive more efficiently

In the UK, just under two thirds of the price that you pay for a litre of petrol or diesel is tax. The current fuel duty payable is 57.95 pence per litre and then you also pay standard rate VAT at 20%.

Figures from the RAC show that, in 2016, tax accounted for 63.7 per cent of the price of a litre of diesel and 64.9 per cent of the price of a litre of petrol.

Assuming that a litre of petrol costs £1.15, you pay 74.6p of that in tax. A litre of diesel at the same price sees you pay 73.3 pence in tax.

What this means is that the more fuel you buy, the more tax you pay. So, reducing your fuel consumption could save you a significant amount in tax, depending on how much you use your vehicle.

5 ways to save money on fuel

There are lots of ways that you can drive more efficiently. By doing so you will use less fuel, meaning that for every litre of fuel you save you will pay around 74p less in tax. If you rack up the miles, this could result in significant tax savings.

Here are five easy ways for you to drive more efficiently and to cut the amount of fuel tax you pay.

Change gear faster

The higher the gear that you drive in, the lower your engine speed. This can improve fuel efficiency and so it pays to change up a gear whenever you can, without labouring your engine.

Try to change gear earlier when you are accelerating, and don’t wait until the rev counter is in the red before changing up.

Keep your car aerodynamic

The fuel consumption of your vehicle is partly determined by how aerodynamic it is. So, try to avoid driving with boxes or bikes on the roof and keep your windows and sunroof closed if you can.

Driving faster will also increase the wind resistance you encounter, causing your vehicle to use more fuel.

Drive more slowly

Reducing your speed from 62 mph to 56 mph will reduce your fuel consumption by around 10 per cent whilst the AA says that driving at 70 mph instead of 85 mph on motorways decreases petrol consumption by between 20 and 25 per cent.

Reduce excess weight

Every additional kilogram of weight in your vehicle affects your fuel efficiency. So, always remove heavy objects from your vehicle when you are not using them.

In addition, the weight of the fuel itself can affect economy. Some experts suggest putting a smaller amount of fuel in your vehicle more often, rather than filling up your tank in one go.

Have your vehicle regularly serviced

A well-tuned engine can improve your fuel economy. Having your car regularly serviced and using good quality oil can ensure your engine is working well and minimising the amount of fuel it uses to function.

In addition, correctly inflated tyres can help your fuel consumption. A tyre that is under inflated can reduce your fuel economy, meaning greater fuel costs and tax bills.